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20:37

EricX.Li
A tale of two political systems
2M views Jul 2013

Good morning. My name is Eric Li, and I was born here. But no, I wasn't born there. This was where I
was born: Shanghai, at the height of the Cultural Revolution. My grandmother tells me that she heard
the sound of gunfire along with my first cries.
When I was growing up, I was told a story that explained all I ever needed to know about humanity. It
went like this. All human societies develop in linear progression, beginning with primitive society,
then slave society, feudalism, capitalism, socialism, and finally, guess where we end up?
Communism! Sooner or later, all of humanity, regardless of culture, language, nationality, will arrive
at this final stage of political and social development. The entire world's peoples will be unified in this

paradise on Earth and live happily ever after. But before we get there, we're engaged in a struggle
between good and evil, the good of socialism against the evil of capitalism, and the good shall
triumph.
That, of course, was the meta-narrative distilled from the theories of Karl Marx. And the Chinese
bought it. We were taught that grand story day in and day out. It became part of us, and we believed
in it. The story was a bestseller. About one third of the entire world's population lived under that
meta-narrative.
Then, the world changed overnight. As for me, disillusioned by the failed religion of my youth, I went
to America and became a Berkeley hippie.
(Laughter)
Now, as I was coming of age, something else happened. As if one big story wasn't enough, I was
told another one. This one was just as grand. It also claims that all human societies develop in a
linear progression towards a singular end. This one went as follows: All societies, regardless of
culture, be it Christian, Muslim, Confucian, must progress from traditional societies in which groups
are the basic units to modern societies in which atomized individuals are the sovereign units, and all
these individuals are, by definition, rational, and they all want one thing: the vote. Because they are
all rational, once given the vote, they produce good government and live happily ever after. Paradise
on Earth, again. Sooner or later, electoral democracy will be the only political system for all countries
and all peoples, with a free market to make them all rich. But before we get there, we're engaged in a
struggle between good and evil. (Laughter) The good belongs to those who are democracies and are
charged with a mission of spreading it around the globe, sometimes by force, against the evil of
those who do not hold elections.
(Video) George H.W. Bush: A new world order ...
(Video) George W. Bush: ... ending tyranny in our world ...
(Video) Barack Obama: ... a single standard for all who would hold power.
Eric X. Li: Now -(Laughter) (Applause)
This story also became a bestseller. According to Freedom House, the number of democracies went
from 45 in 1970 to 115 in 2010. In the last 20 years, Western elites tirelessly trotted around the globe
selling this prospectus: Multiple parties fight for political power and everyone voting on them is the
only path to salvation to the long-suffering developing world. Those who buy the prospectus are
destined for success. Those who do not are doomed to fail. But this time, the Chinese didn't buy it.
Fool me once ...
(Laughter)

The rest is history. In just 30 years, China went from one of the poorest agricultural countries in the
world to its second-largest economy. Six hundred fifty million people were lifted out of poverty.
Eighty percent of the entire world's poverty alleviation during that period happened in China. In other
words, all the new and old democracies put together amounted to a mere fraction of what a single,
one-party state did without voting.
See, I grew up on this stuff: food stamps. Meat was rationed to a few hundred grams per person per
month at one point. Needless to say, I ate all my grandmother's portions.
So I asked myself, what's wrong with this picture? Here I am in my hometown, my business growing
leaps and bounds. Entrepreneurs are starting companies every day. Middle class is expanding in
speed and scale unprecedented in human history. Yet, according to the grand story, none of this
should be happening. So I went and did the only thing I could. I studied it. Yes, China is a one-party
state run by the Chinese Communist Party, the Party, and they don't hold elections. Three
assumptions are made by the dominant political theories of our time. Such a system is operationally
rigid, politically closed, and morally illegitimate. Well, the assumptions are wrong. The opposites are
true. Adaptability, meritocracy, and legitimacy are the three defining characteristics of China's oneparty system.
Now, most political scientists will tell us that a one-party system is inherently incapable of selfcorrection. It won't last long because it cannot adapt. Now here are the facts. In 64 years of running
the largest country in the world, the range of the Party's policies has been wider than any other
country in recent memory, from radical land collectivization to the Great Leap Forward, then
privatization of farmland, then the Cultural Revolution, then Deng Xiaoping's market reform, then
successor Jiang Zemin took the giant political step of opening up Party membership to private
businesspeople, something unimaginable during Mao's rule.
So the Party self-corrects in rather dramatic fashions. Institutionally, new rules get enacted to correct
previous dysfunctions. For example, term limits. Political leaders used to retain their positions for life,
and they used that to accumulate power and perpetuate their rules. Mao was the father of modern
China, yet his prolonged rule led to disastrous mistakes. So the Party instituted term limits with
mandatory retirement age of 68 to 70.
One thing we often hear is, "Political reforms have lagged far behind economic reforms," and "China
is in dire need of political reform." But this claim is a rhetorical trap hidden behind a political bias.
See, some have decided a priori what kinds of changes they want to see, and only such changes can
be called political reform. The truth is, political reforms have never stopped. Compared with 30 years
ago, 20 years, even 10 years ago, every aspect of Chinese society, how the country is governed,
from the most local level to the highest center, are unrecognizable today. Now such changes are
simply not possible without political reforms of the most fundamental kind. Now I would venture to
suggest the Party is the world's leading expert in political reform.
The second assumption is that in a one-party state, power gets concentrated in the hands of the few,
and bad governance and corruption follow. Indeed, corruption is a big problem, but let's first look at
the larger context. Now, this may be counterintuitive to you. The Party happens to be one of the
most meritocratic political institutions in the world today. China's highest ruling body, the Politburo,

has 25 members. In the most recent one, only five of them came from a background of privilege, socalled princelings. The other 20, including the president and the premier, came from entirely ordinary
backgrounds. In the larger central committee of 300 or more, the percentage of those who were born
into power and wealth was even smaller. The vast majority of senior Chinese leaders worked and
competed their way to the top. Compare that with the ruling elites in both developed and developing
countries, I think you'll find the Party being near the top in upward mobility.
The question then is, how could that be possible in a system run by one party? Now we come to a
powerful political institution, little-known to Westerners: the Party's Organization Department. The
department functions like a giant human resource engine that would be the envy of even some of the
most successful corporations. It operates a rotating pyramid made up of three components: civil
service, state-owned enterprises, and social organizations like a university or a community program.
They form separate yet integrated career paths for Chinese officials. They recruit college grads into
entry-level positions in all three tracks, and they start from the bottom, called "keyuan" [clerk]. Then
they could get promoted through four increasingly elite ranks: fuke [deputy section manager], ke
[section manager], fuchu [deputy division manager], and chu [division manger]. Now these are not
moves from "Karate Kid," okay? It's serious business. The range of positions is wide, from running
health care in a village to foreign investment in a city district to manager in a company. Once a year,
the department reviews their performance. They interview their superiors, their peers, their
subordinates. They vet their personal conduct. They conduct public opinion surveys. Then they
promote the winners. Throughout their careers, these cadres can move through and out of all three
tracks. Over time, the good ones move beyond the four base levels to the fuju [deputy bureau chief]
and ju [bureau chief] levels. There, they enter high officialdom. By that point, a typical assignment will
be to manage a district with a population in the millions or a company with hundreds of millions of
dollars in revenue. Just to show you how competitive the system is, in 2012, there were 900,000 fuke
and ke levels, 600,000 fuchu and chu levels, and only 40,000 fuju and ju levels.
After the ju levels, the best few move further up several more ranks, and eventually make it to the
Central Committee. The process takes two to three decades. Does patronage play a role? Yes, of
course. But merit remains the fundamental driver. In essence, the Organization Department runs a
modernized version of China's centuries-old mentoring system. China's new president, Xi Jinping, is
the son of a former leader, which is very unusual, first of his kind to make the top job. Even for him,
the career took 30 years. He started as a village manager, and by the time he entered the Politburo,
he had managed areas with a total population of 150 million people and combined GDPs of 1.5
trillion U.S. dollars.
Now, please don't get me wrong, okay? This is not a put-down of anyone. It's just a statement of
fact. George W. Bush, remember him? This is not a put-down. (Laughter) Before becoming governor
of Texas, or Barack Obama before running for president, could not make even a small county
manager in China's system. Winston Churchill once said that democracy is a terrible system except
for all the rest. Well, apparently he hadn't heard of the Organization Department.
Now, Westerners always assume that multi-party election with universal suffrage is the only source
of political legitimacy.
I was asked once, "The Party wasn't voted in by election. Where is the source of legitimacy?"

I said, "How about competency?"

We all know the facts. In 1949, when the Party took power, China was mired in civil wars,
dismembered by foreign aggression, average life expectancy at that time, 41 years old. Today, it's
the second largest economy in the world, an industrial powerhouse, and its people live in increasing
prosperity.
Pew Research polls Chinese public attitudes, and here are the numbers in recent years. Satisfaction
with the direction of the country: 85 percent. Those who think they're better off than five years ago:
70 percent. Those who expect the future to be better: a whopping 82 percent. Financial Times polls
global youth attitudes, and these numbers, brand new, just came from last week. Ninety-three
percent of China's Generation Y are optimistic about their country's future. Now, if this is not
legitimacy, I'm not sure what is.
In contrast, most electoral democracies around the world are suffering from dismal performance. I
don't need to elaborate for this audience how dysfunctional it is, from Washington to European
capitals. With a few exceptions, the vast number of developing countries that have adopted electoral
regimes are still suffering from poverty and civil strife. Governments get elected, and then they fall
below 50 percent approval in a few months and stay there and get worse until the next election.
Democracy is becoming a perpetual cycle of elect and regret. At this rate, I'm afraid it is democracy,
not China's one-party system, that is in danger of losing legitimacy.
Now, I don't want to create the misimpression that China's hunky-dory, on the way to some kind of
superpowerdom. The country faces enormous challenges. The social and economic problems that
come with wrenching change like this are mind-boggling. Pollution is one. Food safety. Population
issues. On the political front, the worst problem is corruption. Corruption is widespread and
undermines the system and its moral legitimacy. But most analysts misdiagnose the disease. They
say that corruption is the result of the one-party system, and therefore, in order to cure it, you have
to do away with the entire system.
But a more careful look would tell us otherwise. Transparency International ranks China between 70
and 80 in recent years among 170 countries, and it's been moving up. India, the largest democracy
in the world, 94 and dropping. For the hundred or so countries that are ranked below China, more
than half of them are electoral democracies. So if election is the panacea for corruption, how come
these countries can't fix it?
Now, I'm a venture capitalist. I make bets. It wouldn't be fair to end this talk without putting myself
on the line and making some predictions. So here they are. In the next 10 years, China will surpass
the U.S. and become the largest economy in the world. Income per capita will be near the top of all
developing countries. Corruption will be curbed, but not eliminated, and China will move up 10 to 20
notches to above 60 in T.I. ranking. Economic reform will accelerate, political reform will continue,
and the one-party system will hold firm.
We live in the dusk of an era. Meta-narratives that make universal claims failed us in the 20th century
and are failing us in the 21st. Meta-narrative is the cancer that is killing democracy from the inside.
Now, I want to clarify something. I'm not here to make an indictment of democracy. On the contrary,

I think democracy contributed to the rise of the West and the creation of the modern world. It is the
universal claim that many Western elites are making about their political system, the hubris, that is at
the heart of the West's current ills. If they would spend just a little less time on trying to force their
way onto others, and a little bit more on political reform at home, they might give their democracy a
better chance. China's political model will never supplant electoral democracy, because unlike the
latter, it doesn't pretend to be universal. It cannot be exported. But that is the point precisely. The
significance of China's example is not that it provides an alternative, but the demonstration that
alternatives exist. Let us draw to a close this era of meta-narratives. Communism and democracy
may both be laudable ideals, but the era of their dogmatic universalism is over. Let us stop telling
people and our children there's only one way to govern ourselves and a singular future towards
which all societies must evolve. It is wrong. It is irresponsible. And worst of all, it is boring. Let
universality make way for plurality. Perhaps a more interesting age is upon us. Are we brave enough
to welcome it?
Thank you.
(Applause)
Thank you. Thank you. Thank you. Thanks.
Bruno Giussani: Eric, stay with me for a couple of minutes, because I want to ask you a couple of
questions. I think many here, and in general in Western countries, would agree with your statement
about analysis of democratic systems becoming dysfunctional, but at the same time, many would
kind of find unsettling the thought that there is an unelected authority that, without any form of
oversight or consultation, decides what the national interest is. What is the mechanism in the
Chinese model that allows people to say, actually, the national interest as you defined it is wrong?
EXL: You know, Frank Fukuyama, the political scientist, called the Chinese system "responsive
authoritarianism." It's not exactly right, but I think it comes close. So I know the largest public
opinion survey company in China, okay? Do you know who their biggest client is? The Chinese
government. Not just from the central government, the city government, the provincial government,
to the most local neighborhood districts. They conduct surveys all the time. Are you happy with the
garbage collection? Are you happy with the general direction of the country? So there is, in China,
there is a different kind of mechanism to be responsive to the demands and the thinking of the
people. My point is, I think we should get unstuck from the thinking that there's only one political
system -- election, election, election -- that could make it responsive. I'm not sure, actually, elections
produce responsive government anymore in the world.
(Applause)
BG: Many seem to agree. One of the features of a democratic system is a space for civil society to
express itself. And you have shown figures about the support that the government and the
authorities have in China. But then you've just mentioned other elements like, you know, big
challenges, and there are, of course, a lot of other data that go in a different direction: tens of
thousands of unrests and protests and environmental protests, etc. So you seem to suggest the
Chinese model doesn't have a space outside of the Party for civil society to express itself.

EXL: There's a vibrant civil society in China, whether it's environment or what-have-you. But it's
different. You wouldn't recognize it. Because, by Western definitions, a so-called civil society has to
be separate or even in opposition to the political system, but that concept is alien for Chinese
culture. For thousands of years, you have civil society, yet they are consistent and coherent and part
of a political order, and I think it's a big cultural difference.
BG: Eric, thank you for sharing this with TED. EXL: Thank you.

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